The US food distribution system is in trouble. Consider this disparity. Food waste accounts for 30% of the U.S. food supply, even though the U.S. Department of Agriculture considers 10% of the more than 65,000 census tracts in the U.S. to be food deserts, places where residents have little access. 40%. For nutritious and affordable food.
Add to that the lingering impact of the COVID-19 pandemic. Demand for food increased as lockdown measures eased as consumers no longer felt pressure to stretch out food they might have in their refrigerators and pantries. That’s more than 14% higher than the year-to-date average.
This causes some problems. For one thing, food distributors need to stock up on products to meet that growing demand and be able to sell as many products as possible. But with food prices rising, the consequences of overstocking can be just as severe. I can not do it.
“Our distributor customers need to stock more products to meet the demand of their customers,” says Vormittag Associates Inc. (VAI), a New York-based enterprise resource planning software company. Pete Zimmerman, North America Sales Manager at , explained to Modern Shipper.
“We also have to stock or reorder special items that our customers need.
act of balancing
Zimmerman sits at the forefront of the balancing act that is the post-pandemic food distribution industry. Some of his clients are struggling to meet the demands of restaurant and grocery store customers and are losing potential sales. , went as far as storing food on the warehouse floor.
“We’ve seen customers who actually just put the product in the aisle,” says Zimmerman. “We have to put the product in the aisle because there is no physical space to put it away.”
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The upheaval in food demand has also created some secondary problems for distributors. The main one is the shortage of human labor. Zimmerman explained that HR departments are running out of steam when it comes to finding people to work in distribution centers.
“It’s hard to find people,” he said. “In this economy and everything that’s going on right now, it’s hard to keep people, so the pressure is increasing to do more with less.”
In some cases, food distributors have been forced to expand existing warehouses or add new warehouses to meet increased demand. When Workers are strained to such an extent that they need to get creative to bridge the gap, and Zimmerman believes AI-based technology can bridge that gap.
the brains of the supply chain
For years, the conventional wisdom about food distribution was “get in, get out.” Distributors want to store food for as short a time as possible so that they have space. However, supply chain disruptions have made it impossible for human workers to maintain the boundaries of that strategy without a little help.
“This is a big challenge these days with stressed supply chains and long lead times,” says Zimmerman. “Lead times are possible, but I don’t know day to day, but lead times can change from hour to hour.”
Zimmerman’s company, VAI, is the maker of S2K OnCloud. This is his ERP software built to be the brains of the food distributor supply his chain. S2K gives distributors a glimpse behind the curtain. Automated systems collect customer order and sales data that can later be used to forecast supply and demand.
“The first thing you need is a tool to analyze that historical data. What are the trends? What are your customers buying?” Zimmerman explained.
From there, the software looks for demand trends based on usage. This is defined as the amount of inventory of the item that is used. S2K can determine if demand is trending up or down. We also factor in seasonal demand around holidays and other events.
“If it’s seasonal, the application can say, ‘I need to order it now so I can get that product when I need it so I can distribute it to my customers,'” says Zimmerman. .
All of this information is great, but S2K goes one step further. Through a mechanism Zimmerman calls “recommended purchases,” the system tells merchants exactly how much product they need to order, when to order, and where to store it. Safety stock and maximum capacity are also considered to prevent overstock.
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S2K can also tell distributors when to order “non-inventory” items that the vendor does not keep in stock but order at the customer’s request. These orders are often tailored to specific vendors and can be difficult to track manually.
VAI’s software also helps distributors generate demand. “So customers can find secondary or tertiary vendors to fill their inventory.
“Or…they can suggest an alternative. So the vendor may not have product X available, but they have a valid alternative, product Y. So they can go back to the customer, Instead of losing the sale, you can convert that sale to another item.”
S2K allows distributors to navigate between different levels of consumer demand. VAI has another tool to keep distribution center employees up to date. It provides clients with an app running on smartphones with Android or Apple software that employees can use to access workflows anywhere on the floor.
“It’s not like it used to be when we had RF. [radio frequency] The technology — certainly more efficient, but often more difficult to use — is very familiar to users with the new apps,” said Zimmerman. “Familiar users he has an interface, which makes onboarding new hires so much easier.”
Zimmerman believes the same automated systems employed by distributors could quickly become popular among the vendors themselves. As it stands, many of his client’s restaurant and grocery store customers still rely on manual methods. But it may not be long before AI reaches the end consumer.
“Whether it’s a retailer or a restaurant, I think we’ll have artificial intelligence tools that tell us how much to reorder in stores. ‘, he explained. “But in the end he thinks there are tools and features that are put into the hands of users.”
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